China cool to US push to cut off Iranian oil revenue; Sanctions could push up oil prices and hurt global economy.

Dear Reader,
As you can imagine, more people are reading The Jerusalem Post than ever before.
Nevertheless, traditional business models are no longer sustainable and high-quality publications,
like ours, are being forced to look for new ways to keep going. Unlike many other news organizations,
we have not put up a paywall. We want to keep our journalism open
and accessible and be able to keep providing you with news
and analyses from the frontlines of Israel, the Middle East and the Jewish World.

TOKYO - Japan pledged on Thursday to take concrete action to cut Iranian oil imports in response to an appeal for support from visiting US Treasury Secretary Timothy Geithner, as Washington steps up efforts to sanction Tehran over its disputed nuclear program.

Geithner welcomed Tokyo's cooperation, an encouraging sign for US foreign policy after China rebuffed US sanctions aimed at starving Iran of the oil revenues that provide the country of 74 million people with a vital economic support.

Iran faces the prospects of cutbacks in oil sales to China, Japan and India, its top three buyers who together take more than 40 percent of its crude exports. The European Union, a major buyer, has committed to banning imports of Iranian oil.

Cutting Iranian crude imports would not be without risks for Japan. The
country relies on imports for its energy needs and has to import more
fuel to make up for waning use of nuclear power following last year's
nuclear disaster in Fukushima.

Anxiety over Iran's nuclear program, which it says is not for military
use, could also push up oil prices and harm the global economy.

Indeed, Japan Prime Minister Yoshihiko Noda voiced concern to Geithner
about the potential impact of the U.S. sanctions on Japan and the world
economy.

US President Barack Obama authorized a law on December 31 imposing
sanctions on financial institutions that deal with Iran's central bank,
the country's main clearing house for oil payments.

Japan's government hopes to secure a waiver from the sanctions for
Japanese banks by reducing Iranian crude imports, something it has
started discussing with the domestic oil industry, the Yomiuri newspaper
reported.

However, sources at two major Japanese oil refiners that buy Iranian
crude said they had not yet been approached by the government.

Azumi didn't elaborate on what he meant by "non-crude oil related
areas," but one potential issue is its repeated intervention to weaken
the yen to boost exports.

Azumi said he had meaningful discussions on currencies with Geithner but
declined to reveal the details. Geithner also declined to comment on
Japan's intervention .

Cutting off Iran's central bank

Geithner travelled to China and Japan this week to discuss the global
economy and seek cooperation on stricter sanctions on Iran, an OPEC
member and the world's fifth-largest crude exporter.

Iran denies Western suspicions that its nuclear program has military goals, saying it is for purely peaceful purposes.

Washington has rejected Iran's assertion and has pressed ahead with new sanctions.

The latest law would freeze financial institutions that deal with Iran's
central bank out of US markets. The United States can waive some
institutions if it deems it necessary for energy market stability or if
the institutions' home country significantly reduces trade with Iran.

"We are exploring ways to cut Iran's central bank off from the global
financial system. We are in the early stages of consulting with Japan
and our other allies," Geithner said.

"We appreciate the support that Japan has provided."

Japan asked the United States to waive its banks in return for cutting
Iranian oil imports, but Japan must decide how it will lower imports and
then it is up to the US government to debate whether a waiver will be
granted, a Japanese finance ministry official told reporters.

Japan will present Washington with a "menu" of possible options in
exchange for a waiver by the end of February, a government source told
Reuters last week.

The tightening noose of US sanctions has set off an Asian round of
diplomacy with Middle East oil producers. Japan's Foreign Minister
Koichiro Gemba asked OPEC kingpin Saudi Arabia and fellow cartel
exporter the United Arab Emirates to supply the Asian buyer with more
oil.

China's Premier Wen Jiabao will visit Saudi Arabia, the UAE and Qatar in
a trip beginning this weekend. The prime minister of South Korea,
another major buyer of Iranian crude, is due to visit the UAE and Oman
from Friday.

China gave no hint on Wednesday of giving ground to US demands to curb
Iran's oil revenues, rejecting Washington's sanctions on Tehran as
overstepping. Iran is China's third-largest crude supplier.

US officials sounded more optimistic, saying they will focus more on China's actions than on its public statements.

However, China has reduce crude purchases from Iran for January and February as it dispute contract pricing terms.

The European Union is more sympathetic to US pressure on Iran. EU
foreign minister are expected to agree on a ban on imports of Iranian
crude oil on January 23.

Japan is concerned the new sanctions could drive up oil prices, dealing a
blow to its economy, which is recovering from an earthquake, tsunami
and nuclear power disaster in 2011 that has left it more reliant on
imported energy sources.

The Jerusalem Post Customer Service Center can be contacted with any questions or requests:
Telephone: *2421 * Extension 4 Jerusalem Post or 03-7619056 Fax: 03-5613699E-mail: subs@jpost.com
The center is staffed and provides answers on Sundays through Thursdays between 07:00 and 14:00 and Fridays only handles distribution requests between 7:00 and
13:00
For international customers: The center is staffed and provides answers on Sundays through Thursdays between 7AM and 6PM
Toll Free number in Israel only 1-800-574-574
Telephone +972-3-761-9056
Fax: 972-3-561-3699
E-mail: subs@jpost.com